Exempt employees are individuals who are ‘bono fide executive, administrative, professional or outside sales employees’ exempt from the requirement to compensate overtime at the rate of at least one and half times the regular hourly compensation.
The Fair Labor Standards Act of 1938 (FLSA) promulgates rules related to minimum wages, compensation related to overtime, and recordkeeping requirements. The Act also defines the terms ‘Exempt’ and ‘Non-Exempt’ employees related to overtime.
There are four different types of direct compensation for employees. These include: 1) Hourly Compensation, 2) Salaries, 3) Commissions and 4) Bonuses. There is some misinformation related to direct compensation as this subject relates to owners of a small business.
The Federal Labor Standards Act of 1938 sets the standards as it relates to Exempt and Non-Exempt employees and their associated compensation and work standards. The Labor Standards Act is located in Chapter 20 Section 201 of the Federal Code. This Act is applicable to those small business operations with more than $500,000 of annual revenues and who participate in interstate commerce.
